TopBuild (BLD) 10-Q4 May 232023 Q1 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	Apr. 27, 2023
Cover page.
Entity Registrant Name	TopBuild Corp
Entity Central Index Key	0001633931
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-36870
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-3096382
Entity Address, Address Line One	475 North Williamson Boulevard
Entity Address, City or Town	Daytona Beach
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32114
City Area Code	386
Local Phone Number	304-2200
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	BLD
Security Exchange Name	NYSE
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		31,749,321
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 333,778	$ 240,069
Receivables, net of an allowance for credit losses of $16,007 at March 31, 2023, and $16,281 at December 31, 2022	833,959	836,071
Inventories, net	422,229	438,644
Prepaid expenses and other current assets	22,861	34,257
Total current assets	1,612,827	1,549,041
Right of use assets	211,381	205,892
Property and equipment, net	260,146	253,484
Goodwill	1,992,394	1,966,994
Other intangible assets, net	607,683	614,967
Other assets	16,483	16,453
Total assets	4,700,914	4,606,831
Current liabilities:
Accounts payable	450,963	487,114
Current portion of long-term debt	42,371	40,068
Accrued liabilities	193,347	199,370
Short-term operating lease liabilities	62,110	60,880
Short-term finance lease liabilities	2,452	2,207
Total current liabilities	751,243	789,639
Long-term debt	1,405,931	1,417,257
Deferred tax liabilities, net	252,044	251,481
Long-term portion of insurance reserves	61,466	59,783
Long-term operating lease liabilities	154,844	149,943
Long-term finance lease liabilities	4,983	6,673
Other liabilities	5,259	2,349
Total liabilities	2,635,770	2,677,125
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding
Common stock, $0.01 par value: 250,000,000 shares authorized; 39,465,688 shares issued and 31,750,010 outstanding at March 31, 2023, and 39,325,916 shares issued and 31,642,832 outstanding at December 31, 2022	395	393
Treasury stock, 7,715,678 shares at March 31, 2023, and 7,683,084 shares at December 31, 2022, at cost	(699,149)	(692,799)
Additional paid-in capital	891,530	887,367
Retained earnings	1,892,535	1,756,665
Accumulated other comprehensive loss	(20,167)	(21,920)
Total equity	2,065,144	1,929,706
Total liabilities and equity	$ 4,700,914	$ 4,606,831

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Allowance for credit losses	$ 16,007	$ 16,281
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares, issued	0	0
Preferred stock, shares, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	39,465,688	39,325,916
Common stock, shares outstanding	31,750,010	31,642,832
Treasury stock, shares at cost	7,715,678	7,683,084

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 1,265,238	$ 1,168,918
Cost of sales	895,023	837,717
Gross profit	370,215	331,201
Selling, general, and administrative expense	170,784	167,247
Operating profit	199,431	163,954
Other income (expense), net:
Interest expense	(18,039)	(11,966)
Other, net	1,923	684
Other expense, net	(16,116)	(11,282)
Income before income taxes	183,315	152,672
Income tax expense	(47,445)	(37,961)
Net income	$ 135,870	$ 114,711
Net income per common share:
Basic	$ 4.31	$ 3.50
Diluted	$ 4.28	$ 3.47
Weighted average shares outstanding:
Basic	31,550,658	32,738,525
Diluted	31,713,239	33,042,490

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 135,870	$ 114,711
Other comprehensive income:
Foreign currency translation adjustment	1,753	3,218
Comprehensive income	$ 137,623	$ 117,929

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows Provided by (Used in) Operating Activities:
Net income	$ 135,870	$ 114,711
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32,100	30,499
Share-based compensation	3,135	3,727
Loss on sale of property and equipment	185	207
Amortization of debt issuance costs	720	706
Provision for bad debt expense	1,338	2,512
Loss from inventory obsolescence	1,642	868
Deferred income taxes, net	563	(81)
Change in certain assets and liabilities:
Receivables, net	(10,847)	(65,031)
Inventories, net	20,096	(38,570)
Prepaid expenses and other current assets	11,579	(2,347)
Accounts payable	(25,480)	12,663
Accrued liabilities	(3,339)	29,523
Other, net	2,239	96
Net cash provided by operating activities	169,801	89,483
Cash Flows Provided by (Used in) Investing Activities:
Purchases of property and equipment	(15,580)	(18,413)
Acquisition of businesses, net of cash acquired	(45,845)	(13,967)
Proceeds from sale of property and equipment	455	253
Net cash used in investing activities	(60,970)	(32,127)
Cash Flows Provided by (Used in) Financing Activities:
Repayment of long-term debt	(9,743)	(9,634)
Taxes withheld and paid on employees' equity awards	(6,350)	(11,658)
Exercise of stock options	1,029	808
Repurchase of shares of common stock		(50,000)
Payment of contingent consideration		(23)
Net cash used in financing activities	(15,064)	(70,507)
Cash and Cash Equivalents
Impact of exchange rate changes on cash	(58)	(75)
Net increase (decrease) in cash and cash equivalents	93,709	(13,226)
Cash and cash equivalents- Beginning of period	240,069	139,779
Cash and cash equivalents- End of period	333,778	126,553
Supplemental disclosure of noncash activities:
Leased assets obtained in exchange for new operating lease liabilities	18,271	22,449
Accruals for property and equipment	$ 835	$ 213

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands	Common Stock	Treasury Stock at Cost	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Total
Balance at Dec. 31, 2021	$ 391	$ (431,030)	$ 873,031	$ 1,200,676	$ (6,634)	$ 1,636,434
Increase (Decrease) in Stockholders' Equity
Net income				114,711		114,711
Share-based compensation			3,727			3,727
Issuance of restricted share awards under long-term equity incentive plan	2		(2)
Repurchase of shares		(50,000)				(50,000)
Shares withheld to pay taxes on employees' equity awards		(11,658)				(11,658)
Shares issued upon exercise of stock options			808			808
Other comprehensive income, net of tax					3,218	3,218
Balance at Mar. 31, 2022	393	(492,688)	877,564	1,315,387	(3,416)	1,697,240
Balance at Dec. 31, 2022	393	(692,799)	887,367	1,756,665	(21,920)	1,929,706
Increase (Decrease) in Stockholders' Equity
Net income				135,870		135,870
Share-based compensation			3,135			3,135
Issuance of restricted share awards under long-term equity incentive plan	2					2
Shares withheld to pay taxes on employees' equity awards		(6,350)				(6,350)
Shares issued upon exercise of stock options			1,028			1,028
Other comprehensive income, net of tax					1,753	1,753
Balance at Mar. 31, 2023	$ 395	$ (699,149)	$ 891,530	$ 1,892,535	$ (20,167)	$ 2,065,144

CONDENSED CONSOLIDATED STATEM_5

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Common stock, par value (in dollars per share)	$ 0.01
Issuance of restricted share awards under long-term equity incentive plan (in shares)	95,012	52,940
Repurchase of shares (in shares)		238,154
Number of shares withheld to pay taxes on employees' equity awards (in shares)	32,594	53,073
Shares issued upon exercise of stock options (in shares)	28,840	12,269

Basis of Presentation

Basis of Presentation	3 Months Ended
Basis of Presentation	Mar. 31, 2023
Summary of Significant Accounting Policies
Basis of Presentation	1. BASIS OF PRESENTATION TopBuild was formed on June 30, 2015, and is listed on the NYSE under the ticker symbol “BLD.” We report our business in two segments: Installation and Specialty Distribution. Our Installation segment primarily installs insulation and other building products. Our Specialty Distribution segment primarily sells and distributes insulation and other building products. Our segments are based on our operating units, for which financial information is regularly evaluated by our chief operating decision maker. We believe the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to state fairly our financial position as of March 31, 2023, our results of operations, comprehensive income and cash flows for the three months ended March 31, 2023 and 2022. The condensed consolidated balance sheet at December 31, 2022 was derived from our audited financial statements, but does not include all disclosures required by GAAP. These condensed consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report for the year ended December 31, 2022 as filed with the SEC on February 23, 2023.

Accounting Policies

Accounting Policies	3 Months Ended
Accounting Policies	Mar. 31, 2023
Accounting Policies
Accounting Policies	2. ACCOUNTING POLICIES Financial Statement Presentation. Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated. Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This standard improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, as well as payment terms and their effect on subsequent revenue recognized by the acquirer. This standard became effective for us on January 1, 2023, and did not have a material impact to our financial statements upon adoption.

Revenue Recognition

Revenue Recognition	3 Months Ended
Revenue Recognition	Mar. 31, 2023
Revenue Recognition
Revenue Recognition	3. REVENUE RECOGNITION Revenue is disaggregated between our Installation and Specialty Distribution segments and further based on market and product, as we believe this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following table presents our revenues disaggregated by market (in thousands): Three Months Ended March 31, 2023 2022 Installation Specialty Distribution Eliminations Total Installation Specialty Distribution Eliminations Total Residential $ 645,703 $ 224,326 $ (51,390) $ 818,639 $ 563,303 $ 236,411 $ (43,421) $ 756,293 Commercial/Industrial 121,387 334,049 (8,837) 446,599 113,390 307,451 (8,216) 412,625 Net sales $ 767,090 $ 558,375 $ (60,227) $ 1,265,238 $ 676,693 $ 543,862 $ (51,637) $ 1,168,918 The following table presents our revenues disaggregated by product (in thousands): Three Months Ended March 31, 2023 2022 Installation Specialty Distribution Eliminations Total Installation Specialty Distribution Eliminations Total Insulation and accessories $ 600,767 $ 502,802 $ (51,973) $ 1,051,596 $ 536,341 $ 479,760 $ (43,810) $ 972,291 Glass and windows 63,442 - - 63,442 51,196 - - 51,196 Gutters 28,278 39,842 (7,165) 60,955 22,957 46,631 (7,002) 62,586 All other 74,603 15,731 (1,089) 89,245 66,199 17,471 (825) 82,845 Net sales $ 767,090 $ 558,375 $ (60,227) $ 1,265,238 $ 676,693 $ 543,862 $ (51,637) $ 1,168,918 The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed Consolidated March 31, December 31, Balance Sheets 2023 2022 Contract Assets: Receivables, unbilled Receivables, net $ 78,034 $ 75,481 Contract Liabilities: Deferred revenue Accrued liabilities $ 20,738 $ 21,940 The aggregate amount remaining on uncompleted performance obligations was $395.5 million as of March 31, 2023. We expect to satisfy the performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months . On certain of our long-term contracts, a percentage of the total project cost is withheld and not invoiced to the customer and collected until satisfactory completion of the customer ’ s project, typically within a year. This amount is referred to as retainage and is common practice in the construction industry.

Goodwill and Other Intangibles

Goodwill and Other Intangibles	3 Months Ended
Goodwill and Other Intangibles	Mar. 31, 2023
Goodwill and Other Intangibles
Goodwill and Other Intangibles	4. GOODWILL AND OTHER INTANGIBLES We have two reporting units which are also our operating and reporting segments: Installation and Specialty Distribution. Both reporting units contain goodwill. Assets acquired and liabilities assumed are assigned to the applicable reporting unit based on whether the acquired assets and liabilities relate to the operations of and determination of the fair value of such unit. Goodwill assigned to the reporting unit is the excess of the fair value of the acquired business over the fair value of the individual assets acquired and liabilities assumed for the reporting unit. In the fourth quarter of 2022, we performed an annual assessment on our goodwill resulting in no impairment and there were no indicators of impairment for the three months ended March 31, 2023. Changes in the carrying amount of goodwill for three months ended March 31, 2023, by segment, were as follows, in thousands: Accumulated Gross Goodwill Fx Translation Gross Goodwill Impairment Net Goodwill December 31, 2022 Additions Adjustment March 31, 2023 Losses March 31, 2023 Goodwill, by segment: Installation $ 1,826,979 $ 25,384 $ - $ 1,852,363 $ (762,021) $ 1,090,342 Specialty Distribution 902,036 - 16 902,052 - 902,052 Total goodwill $ 2,729,015 $ 25,384 $ 16 $ 2,754,415 $ (762,021) $ 1,992,394 See Note 11 – Business Combinations Other intangible assets, net includes customer relationships, non-compete agreements, and trademarks / trade names. The following table sets forth our other intangible assets, in thousands: As of March 31, 2023 December 31, 2022 Gross definite-lived intangible assets $ 791,939 $ 782,316 Accumulated amortization (184,256) (167,349) Net definite-lived intangible assets $ 607,683 $ 614,967 The following table sets forth our amortization expense, in thousands: Three Months Ended March 31, 2023 2022 Amortization expense $ 16,896 $ 17,825

Long-Term Debt

Long-Term Debt	3 Months Ended
Long-Term Debt	Mar. 31, 2023
Long-Term Debt
Long-Term Debt	5. LONG-TERM DEBT The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands: As of March 31, 2023 December 31, 2022 3.625% Senior Notes due 2029 $ 400,000 $ 400,000 4.125% Senior Notes due 2032 500,000 500,000 Term loan 558,750 566,250 Equipment notes 6,185 8,427 Unamortized debt issuance costs (16,633) (17,352) Total debt, net of unamortized debt issuance costs 1,448,302 1,457,325 Less: current portion of long-term debt 42,371 40,068 Total long-term debt $ 1,405,931 $ 1,417,257 The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2023, in thousands: 2023 2024 2025 2026 2027 Thereafter Total 3.625% Senior Notes $ - $ - $ - $ - $ - $ 400,000 $ 400,000 4.125% Senior Notes - - - - - 500,000 500,000 Term loan 26,250 45,000 48,750 438,750 - - 558,750 Equipment notes 4,076 2,109 - - - - 6,185 Total $ 30,326 $ 47,109 $ 48,750 $ 438,750 $ - $ 900,000 $ 1,464,935 Credit Agreement The following table outlines the key terms of the Credit Agreement (dollars in thousands): Senior secured term loan facility $ 300,000 Additional delayed draw term loan $ 300,000 Additional term loan and/or revolver capacity available under incremental facility (a) $ 300,000 Revolving facility $ 500,000 Sublimit for issuance of letters of credit under revolving facility (b) $ 100,000 Sublimit for swingline loans under revolving facility (b) $ 35,000 Interest rate as of March 31, 2023 5.91 % Scheduled maturity date 10/7/2026 (a) Additional borrowing capacity is available under the incremental facility, subject to certain terms and conditions (including existing or new lenders providing commitments in respect of such additional borrowing capacity). (b) Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the Revolving Facility. Interest payable on borrowings under the Credit Agreement is based on an applicable margin rate plus, at our option, either: ● A base rate determined by reference to the highest of either (i) the federal funds rate plus 0.50 percent, (ii) BofA’s “prime rate,” and (iii) the SOFR rate for U.S. dollar deposits with a term of one month , plus 1.00 percent; or ● A SOFR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings, subject to a floor of 0% . The applicable margin rate is determined based on our Secured Leverage Ratio. In the case of base rate borrowings, the applicable margin rate ranges from 0.00 percent to 1.50 percent and in the case of SOFR rate borrowings, the applicable margin ranges from 1.00 percent to 2.50 percent. Borrowings under the Credit Agreement are prepayable at the Company’s option without premium or penalty. The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts. Revolving Facility The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs. These standby letters of credit, as well as any outstanding amount borrowed under our Revolving Facility, reduce the availability under the Revolving Facility. The following table summarizes our availability under the Revolving Facility, in thousands: As of March 31, 2023 December 31, 2022 Revolving facility $ 500,000 $ 500,000 Less: standby letters of credit (67,689) (67,689) Availability under revolving facility $ 432,311 $ 432,311 We are required to pay commitment fees to the Lenders in respect of any unutilized commitments. The commitment fees range from 0.15 percent to 0.275 percent per annum, depending on our Secured Leverage Ratio. We must also pay customary fees on outstanding letters of credit. 3.625% Senior Notes The 3.625% Senior Notes are $400.0 million senior unsecured obligations and bear interest at 3.625% per year, payable semiannually in arrears on March 15 and September 15, beginning on September 15, 2021. The 3.625% Senior Notes mature on March 15, 2029, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 3.625% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. The Company may redeem the 3.625% Senior Notes, in whole or in part, at any time on or after March 15, 2024 at the redemption prices specified in the notes. The Company may also redeem all or part of the 3.625% Senior Notes at any time prior to March 15, 2024 at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus the Applicable Premium (as defined in the notes), as of, and accrued and unpaid interest to, the redemption date. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 3.625% Senior Notes prior to March 15, 2024 with the net cash proceeds of certain sales of its capital stock at 103.625% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 60% of the aggregate principal amount of the 3.625% Senior Notes originally issued remains outstanding. 4.125% Senior Notes The 4.125% Senior Notes are $500.0 million senior unsecured obligations and bear interest at 4.125% per year, payable semiannually in arrears on February 15 and August 15, beginning on August 15, 2022. The 4.125% Senior Notes mature on February 15, 2032, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 4.125% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. The Company may redeem the 4.125% Senior Notes, in whole or in part, at any time on or after October 15, 2026 at the redemption prices specified in the notes plus accrued and unpaid interest if redeemed during the 12 month period commencing on October 15 of the years set for: 2026 – 102.063%, 2027 – 101.375%, 2028 – 100.688%, 2029 and thereafter – 100.000%. The Company may also redeem a make-whole redemption of the 4.125% Senior Notes at any time prior to October 15, 2026 at the treasury rate plus 50 basis points. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 4.125% Senior Notes prior to October 15, 2024 with the net cash proceeds of certain sales of its capital stock at 104.125% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 60% of the aggregate principal amount of the notes originally issued remains outstanding. Equipment Notes We did not issue equipment notes during the three months ended March 31, 2023. The company has issued $41.6 million of equipment notes for the purpose of financing the purchase of vehicles and equipment. The Company’s equipment notes each have a five year term maturing in 2023 and 2024 and bear interest at fixed rates between 2.8% and 4.4% . Covenant Compliance The indentures governing our 3.625% Senior Notes and our 4.125% Senior Notes (together, our “Senior Notes”) contain restrictive covenants that, among other things, generally limit the ability of the Company and certain of its subsidiaries (subject to certain exceptions) to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates and (vii) effect mergers. The indentures provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of covenants or other agreements in the indenture; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is continuing under the indenture, the trustee or the holders of at least 30% in aggregate principal amount of each of our Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on the Senior Notes subject to such declaration immediately due and payable. The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the Senior Notes or the guarantees in the future. The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company to incur additional indebtedness or liens; to make certain investments or loans; to make certain restricted payments; to enter into consolidations, mergers, sales of material assets, and other fundamental changes; to transact with affiliates; to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends; or to make certain accounting changes. The Credit Agreement contains customary affirmative covenants and events of default. The Credit Agreement requires that we maintain a Net Leverage Ratio and minimum Interest Coverage Ratio throughout the term of the agreement. The following table outlines the key financial covenants effective for the period covered by this Quarterly Report: As of March 31, 2023 Maximum Net Leverage Ratio 3.50:1.00 Minimum Interest Coverage Ratio 3.00:1.00 Compliance as of period end In Compliance

Fair Value Measurements

Fair Value Measurements	3 Months Ended
Fair Value Measurements	Mar. 31, 2023
Fair Value Measurements
Fair Value Measurements	6 FAIR VALUE MEASUREMENTS Fair Value on Recurring Basis The carrying values of cash and cash equivalents, receivables, net, and accounts payable are considered to be representative of their respective fair values due to the short-term nature of these instruments. Fair Value on Non-Recurring Basis Fair value measurements were applied to our long-term debt portfolio. As of March 31, 2023 Fair Value Gross Carrying Value 3.625% Senior Notes $ 348,580 $ 400,000 4.125% Senior Notes $ 427,500 $ 500,000

Segment Information

Segment Information	3 Months Ended
Segment Information	Mar. 31, 2023
Segment Information
Segment Information	7. SEGMENT INFORMATION The following tables set forth our net sales and operating results by segment, in thousands: Three Months Ended March 31, 2023 2022 2023 2022 Net Sales Operating Profit (b) Operations by segment (a): Installation $ 767,090 $ 676,693 $ 146,897 $ 112,679 Specialty Distribution 558,375 543,862 73,333 70,420 Intercompany eliminations (60,227) (51,637) (9,971) (8,708) Total $ 1,265,238 $ 1,168,918 210,259 174,391 General corporate expense, net (c) (10,828) (10,437) Operating profit, as reported 199,431 163,954 Other expense, net (16,116) (11,282) Income before income taxes $ 183,315 $ 152,672 (a) All of our operations are located primarily in the U.S and to a lesser extent Canada. (b) Segment operating profit includes an allocation of general corporate expenses attributable to the operating segments which is based on direct benefit or usage (such as salaries of corporate employees who directly support the segment). (c) General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs .

Income Taxes

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2023
Income Taxes
Income Taxes	8. INCOME TAXES Our effective tax rates were 25.9 percent and 24.9 percent for the three months ended March 31, 2023 and 2022, respectively. The higher 2023 tax rate was primarily related to a decrease in the benefit related to share-based compensation. A tax benefit of $1.6 million related to share-based compensation was recognized in our condensed consolidated statements of operations as a discrete item in income tax expense for the three months ended March 31, 2022.

Net Income Per Share

Net Income Per Share	3 Months Ended
Net Income Per Share	Mar. 31, 2023
Net Income Per Share
Net Income Per Share	9. NET INCOME PER SHAR E Basic net income per share is calculated by dividing net income by the number of weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is calculated by adjusting the number of weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. Basic and diluted net income per share were computed as follows: Three Months Ended March 31, 2023 2022 Net income (in thousands) $ 135,870 $ 114,711 Weighted average number of common shares outstanding - basic 31,550,658 32,738,525 Dilutive effect of common stock equivalents: RSAs with service-based conditions 22,643 15,127 RSAs with market-based conditions 24,861 100,158 RSAs with performance-based conditions 29,031 64,025 Stock options 86,046 124,655 Weighted average number of common shares outstanding - diluted 31,713,239 33,042,490 Basic net income per common share $ 4.31 $ 3.50 Diluted net income per common share $ 4.28 $ 3.47 The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive: Three Months Ended March 31, 2023 2022 Anti-dilutive common stock equivalents: RSAs with service-based conditions 11,163 10,244 RSAs with market-based conditions 8,933 382 RSAs with performance-based conditions - 7,908 Stock options 22,280 16,587 Total anti-dilutive common stock equivalents 42,376 35,121

Share-Based Compensation

Share-Based Compensation	3 Months Ended
Share-Based Compensation	Mar. 31, 2023
Share-Based Compensation.
Share-Based Compensation	10. SHARE-BASED COMPENSATION Effective July 1, 2015, our eligible employees commenced participation in the 2015 LTIP. The 2015 LTIP authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents. All grants are made by issuing new shares and no more than 4.0 million shares of common stock may be issued under the 2015 LTIP. As of March 31, 2023, we had 1.8 million shares remaining available for issuance under the 2015 LTIP. Share-based compensation expense is included in selling, general, and administrative expense. The income tax effect associated with share-based compensation awards is included in income tax expense. The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands: Three Months Ended March 31, 2023 2022 Share-based compensation expense $ 3,135 $ 3,727 Income tax (expense)/benefit $ (45) $ 1,605 The following table presents a summary of our share-based compensation activity for three months ended March 31, 2023, in thousands, except per share amounts: RSAs Stock Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance December 31, 2022 173.2 $ 195.06 182.2 $ 32.25 $ 86.79 $ 13,992.3 Granted 95.4 $ 202.24 — $ — $ — — Converted/Exercised (95.0) $ 145.57 (28.8) $ 13.07 $ 35.67 $ 4,504.8 Forfeited/Expired (5.3) $ 242.76 — $ — $ — — Balance March 31, 2023 168.3 $ 225.41 153.4 $ 35.98 $ 96.40 $ 17,277.2 Exercisable March 31, 2023 (a) 145.9 $ 33.25 $ 90.39 $ 17,277.2 (a) The weighted average remaining contractual term for vested stock options is approximately 5.9 years. We had unrecognized share-based compensation expense related to unvested awards is shown in the following table, dollars in thousands: As of March 31, 2023 Unrecognized Compensation Expense on Unvested Awards Weighted Average Remaining Compensation Expense Period RSAs $ 24,835 1.2 Stock options 397 0.5 Total unrecognized compensation expense related to unvested awards $ 25,232 Our RSAs with performance-based conditions are evaluated on a quarterly basis with adjustments to compensation expense based on the likelihood of the performance target being achieved or exceeded. The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands: Payout Ranges and Related Expense RSAs with Performance-Based Conditions Grant Date Fair Value 0% 25% 100% 200% February 16, 2021 $ 2,197 $ - $ 549 $ 2,197 $ 4,394 February 15, 2022 $ 3,097 $ - $ 774 $ 3,097 $ 6,194 February 21, 2023 $ 4,192 $ - $ 1,048 $ 4,192 $ 8,384 During the first quarter of 2023, RSAs with performance-based conditions that were granted on February 17, 2020 vested based on cumulative three-year achievement of 200%. Total compensation expense recognized over the three-year performance period, net of forfeitures, was $5.0 million. The fair value of our RSAs with a market-based condition granted under the 2015 LTIP was determined using a Monte Carlo simulation. The following are key inputs in the Monte Carlo analysis for awards granted in 2023 and 2022: 2023 2022 Measurement period (years) 2.86 2.87 Risk free interest rate 4.42 % 1.76 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs at grant date $ 270.64 $ 298.20

Business Combinations

Business Combinations	3 Months Ended
Business Combinations	Mar. 31, 2023
Business Combinations
Business Combinations	11. BUSINESS COMBINATIONS Acquiring businesses is a key part of our ongoing strategy to grow our company and expand our market share. Each acquisition has been accounted for as a business combination under ASC 805, “Business Combinations.” Acquisition related costs for the three months ended March 31, 2023 and 2022, were $1.7 million and $0.9 million, respectively. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations. On January 26, 2023, we acquired the assets of the residential insulation business of SRI. This installation acquisition enhanced our presence in Georgia, Michigan, Ohio, Florida, Alabama and South Carolina. The purchase price of $45.8 million was funded by cash on hand and we recognized goodwill of $25.4 in connection with this acquisition. As third-party or internal valuations are finalized, certain tax aspects of the foregoing transactions are completed, and customer post-closing reviews are concluded, adjustments may be made to the fair value of assets acquired, and in some cases total purchase price, through the end of each measurement period, generally one year following the applicable acquisition date. The table below provides a summary as of March 31, 2023 for the businesses acquired and paid for with cash during the three months ended March 31, 2022, in thousands: 2022 Acquisitions Date Cash Paid Goodwill Acquired Billings 2/3/2022 $ 7,005 $ 3,313 All others Various 1,500 780 Total $ 8,505 $ 4,093 Goodwill to be recognized in connection with acquisitions is attributable to the synergies expected to be realized and improvements in the businesses after the acquisitions. Primarily all of the $25.4 million and $4.1 million of goodwill recorded from acquisitions completed in the three months ended March 31, 2023 and 2022, respectively, is expected to be deductible for income tax purposes.

Accrued Liabilities

Accrued Liabilities	3 Months Ended
Accrued Liabilities	Mar. 31, 2023
Accrued Liabilities.
Accrued Liabilities	12. ACCRUED LIABILITIES The following table sets forth the components of accrued liabilities, in thousands: As of March 31, 2023 December 31, 2022 Accrued liabilities: Salaries, wages, and bonus/commissions $ 52,742 $ 75,901 Income taxes payable 40,740 2,134 Insurance liabilities 28,199 28,870 Customer rebates 11,169 21,561 Deferred revenue 20,738 21,940 Sales and property taxes 15,850 15,757 Interest payable on long-term debt 3,193 12,146 Other 20,716 21,061 Total accrued liabilities $ 193,347 $ 199,370 See Note 3 – Revenue Recognition

Other Commitments and Contingen

Other Commitments and Contingencies	3 Months Ended
Other Commitments and Contingencies	Mar. 31, 2023
Other Commitments and Contingencies
Other Commitments and Contingencies	13. OTHER COMMITMENTS AND CONTINGENCIES Litigation Other Matters We also maintain indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. We occasionally use performance bonds to ensure completion of our work on certain larger customer contracts that can span multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. We also have bonds outstanding for license and insurance. The following table summarizes our outstanding performance, licensing, insurance and other bonds, in thousands: As of March 31, 2023 December 31, 2022 Outstanding bonds: Performance bonds $ 147,468 $ 152,434 Licensing, insurance, and other bonds 25,527 25,439 Total bonds $ 172,995 $ 177,873

Accounting Policies (Policies)

Accounting Policies (Policies)	3 Months Ended
Accounting Policies (Policies)	Mar. 31, 2023
Accounting Policies
Financial Statement Presentation	Financial Statement Presentation. Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This standard improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, as well as payment terms and their effect on subsequent revenue recognized by the acquirer. This standard became effective for us on January 1, 2023, and did not have a material impact to our financial statements upon adoption.

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
Revenue Recognition (Tables)	Mar. 31, 2023
Revenue Recognition
Schedule of revenues disaggregated by market and product	Three Months Ended March 31, 2023 2022 Installation Specialty Distribution Eliminations Total Installation Specialty Distribution Eliminations Total Residential $ 645,703 $ 224,326 $ (51,390) $ 818,639 $ 563,303 $ 236,411 $ (43,421) $ 756,293 Commercial/Industrial 121,387 334,049 (8,837) 446,599 113,390 307,451 (8,216) 412,625 Net sales $ 767,090 $ 558,375 $ (60,227) $ 1,265,238 $ 676,693 $ 543,862 $ (51,637) $ 1,168,918 The following table presents our revenues disaggregated by product (in thousands): Three Months Ended March 31, 2023 2022 Installation Specialty Distribution Eliminations Total Installation Specialty Distribution Eliminations Total Insulation and accessories $ 600,767 $ 502,802 $ (51,973) $ 1,051,596 $ 536,341 $ 479,760 $ (43,810) $ 972,291 Glass and windows 63,442 - - 63,442 51,196 - - 51,196 Gutters 28,278 39,842 (7,165) 60,955 22,957 46,631 (7,002) 62,586 All other 74,603 15,731 (1,089) 89,245 66,199 17,471 (825) 82,845 Net sales $ 767,090 $ 558,375 $ (60,227) $ 1,265,238 $ 676,693 $ 543,862 $ (51,637) $ 1,168,918
Schedule of contract assets and contract liabilities with customers	The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed Consolidated March 31, December 31, Balance Sheets 2023 2022 Contract Assets: Receivables, unbilled Receivables, net $ 78,034 $ 75,481 Contract Liabilities: Deferred revenue Accrued liabilities $ 20,738 $ 21,940

Goodwill and Other Intangibles

Goodwill and Other Intangibles (Tables)	3 Months Ended
Goodwill and Other Intangibles (Tables)	Mar. 31, 2023
Goodwill and Other Intangibles
Changes in the carrying amount of goodwill by segment	Changes in the carrying amount of goodwill for three months ended March 31, 2023, by segment, were as follows, in thousands: Accumulated Gross Goodwill Fx Translation Gross Goodwill Impairment Net Goodwill December 31, 2022 Additions Adjustment March 31, 2023 Losses March 31, 2023 Goodwill, by segment: Installation $ 1,826,979 $ 25,384 $ - $ 1,852,363 $ (762,021) $ 1,090,342 Specialty Distribution 902,036 - 16 902,052 - 902,052 Total goodwill $ 2,729,015 $ 25,384 $ 16 $ 2,754,415 $ (762,021) $ 1,992,394
Schedule of other intangible assets	Other intangible assets, net includes customer relationships, non-compete agreements, and trademarks / trade names. The following table sets forth our other intangible assets, in thousands: As of March 31, 2023 December 31, 2022 Gross definite-lived intangible assets $ 791,939 $ 782,316 Accumulated amortization (184,256) (167,349) Net definite-lived intangible assets $ 607,683 $ 614,967
Schedule of amortization expense	As of March 31, 2023 December 31, 2022 Gross definite-lived intangible assets $ 791,939 $ 782,316 Accumulated amortization (184,256) (167,349) Net definite-lived intangible assets $ 607,683 $ 614,967

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
Long-Term Debt (Tables)	Mar. 31, 2023
Long-Term Debt
Reconciliation of principal balance of outstanding debt	The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands: As of March 31, 2023 December 31, 2022 3.625% Senior Notes due 2029 $ 400,000 $ 400,000 4.125% Senior Notes due 2032 500,000 500,000 Term loan 558,750 566,250 Equipment notes 6,185 8,427 Unamortized debt issuance costs (16,633) (17,352) Total debt, net of unamortized debt issuance costs 1,448,302 1,457,325 Less: current portion of long-term debt 42,371 40,068 Total long-term debt $ 1,405,931 $ 1,417,257
Schedule of remaining principal payments of debt	The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2023, in thousands: 2023 2024 2025 2026 2027 Thereafter Total 3.625% Senior Notes $ - $ - $ - $ - $ - $ 400,000 $ 400,000 4.125% Senior Notes - - - - - 500,000 500,000 Term loan 26,250 45,000 48,750 438,750 - - 558,750 Equipment notes 4,076 2,109 - - - - 6,185 Total $ 30,326 $ 47,109 $ 48,750 $ 438,750 $ - $ 900,000 $ 1,464,935
Summary of key terms of the Credit Agreement	The following table outlines the key terms of the Credit Agreement (dollars in thousands): Senior secured term loan facility $ 300,000 Additional delayed draw term loan $ 300,000 Additional term loan and/or revolver capacity available under incremental facility (a) $ 300,000 Revolving facility $ 500,000 Sublimit for issuance of letters of credit under revolving facility (b) $ 100,000 Sublimit for swingline loans under revolving facility (b) $ 35,000 Interest rate as of March 31, 2023 5.91 % Scheduled maturity date 10/7/2026 (a) Additional borrowing capacity is available under the incremental facility, subject to certain terms and conditions (including existing or new lenders providing commitments in respect of such additional borrowing capacity). (b) Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the Revolving Facility.
Schedule of availability under the Revolving Facility	The following table summarizes our availability under the Revolving Facility, in thousands: As of March 31, 2023 December 31, 2022 Revolving facility $ 500,000 $ 500,000 Less: standby letters of credit (67,689) (67,689) Availability under revolving facility $ 432,311 $ 432,311
Schedule of the key financial covenants	As of March 31, 2023 Maximum Net Leverage Ratio 3.50:1.00 Minimum Interest Coverage Ratio 3.00:1.00 Compliance as of period end In Compliance

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
Fair Value Measurements (Tables)	Mar. 31, 2023
Fair Value Measurements
Schedule of fair value of liabilities	As of March 31, 2023 Fair Value Gross Carrying Value 3.625% Senior Notes $ 348,580 $ 400,000 4.125% Senior Notes $ 427,500 $ 500,000

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
Segment Information (Tables)	Mar. 31, 2023
Segment Information
Schedule of net sales and operating results by segment	The following tables set forth our net sales and operating results by segment, in thousands: Three Months Ended March 31, 2023 2022 2023 2022 Net Sales Operating Profit (b) Operations by segment (a): Installation $ 767,090 $ 676,693 $ 146,897 $ 112,679 Specialty Distribution 558,375 543,862 73,333 70,420 Intercompany eliminations (60,227) (51,637) (9,971) (8,708) Total $ 1,265,238 $ 1,168,918 210,259 174,391 General corporate expense, net (c) (10,828) (10,437) Operating profit, as reported 199,431 163,954 Other expense, net (16,116) (11,282) Income before income taxes $ 183,315 $ 152,672 (a) All of our operations are located primarily in the U.S and to a lesser extent Canada. (b) Segment operating profit includes an allocation of general corporate expenses attributable to the operating segments which is based on direct benefit or usage (such as salaries of corporate employees who directly support the segment). (c) General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs .

Net Income Per Share (Tables)

Net Income Per Share (Tables)	3 Months Ended
Net Income Per Share (Tables)	Mar. 31, 2023
Net Income Per Share
Schedule of basic and diluted income per share	Basic and diluted net income per share were computed as follows: Three Months Ended March 31, 2023 2022 Net income (in thousands) $ 135,870 $ 114,711 Weighted average number of common shares outstanding - basic 31,550,658 32,738,525 Dilutive effect of common stock equivalents: RSAs with service-based conditions 22,643 15,127 RSAs with market-based conditions 24,861 100,158 RSAs with performance-based conditions 29,031 64,025 Stock options 86,046 124,655 Weighted average number of common shares outstanding - diluted 31,713,239 33,042,490 Basic net income per common share $ 4.31 $ 3.50 Diluted net income per common share $ 4.28 $ 3.47
Summary of shares excluded from the calculation of diluted income per share because their effect would have been anti-dilutive	The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive: Three Months Ended March 31, 2023 2022 Anti-dilutive common stock equivalents: RSAs with service-based conditions 11,163 10,244 RSAs with market-based conditions 8,933 382 RSAs with performance-based conditions - 7,908 Stock options 22,280 16,587 Total anti-dilutive common stock equivalents 42,376 35,121

Share-Based Compensation (Table

Share-Based Compensation (Tables)	3 Months Ended
Share-Based Compensation (Tables)	Mar. 31, 2023
Share-Based Compensation
Schedule of share-based compensation expense and related income tax benefit	The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands: Three Months Ended March 31, 2023 2022 Share-based compensation expense $ 3,135 $ 3,727 Income tax (expense)/benefit $ (45) $ 1,605
Schedule of share-based compensation activity	The following table presents a summary of our share-based compensation activity for three months ended March 31, 2023, in thousands, except per share amounts: RSAs Stock Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance December 31, 2022 173.2 $ 195.06 182.2 $ 32.25 $ 86.79 $ 13,992.3 Granted 95.4 $ 202.24 — $ — $ — — Converted/Exercised (95.0) $ 145.57 (28.8) $ 13.07 $ 35.67 $ 4,504.8 Forfeited/Expired (5.3) $ 242.76 — $ — $ — — Balance March 31, 2023 168.3 $ 225.41 153.4 $ 35.98 $ 96.40 $ 17,277.2 Exercisable March 31, 2023 (a) 145.9 $ 33.25 $ 90.39 $ 17,277.2 (a) The weighted average remaining contractual term for vested stock options is approximately 5.9 years.
Schedule of unrecognized share-based compensation expense relating to unvested awards	We had unrecognized share-based compensation expense related to unvested awards is shown in the following table, dollars in thousands: As of March 31, 2023 Unrecognized Compensation Expense on Unvested Awards Weighted Average Remaining Compensation Expense Period RSAs $ 24,835 1.2 Stock options 397 0.5 Total unrecognized compensation expense related to unvested awards $ 25,232
Schedule of key inputs used to estimate the fair value of awards	2023 2022 Measurement period (years) 2.86 2.87 Risk free interest rate 4.42 % 1.76 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs at grant date $ 270.64 $ 298.20
Performance-based conditions \| Restricted Stock Awards
Share-Based Compensation
Schedule of the range of payouts and the related expense for RSAs with performance-based conditions	Payout Ranges and Related Expense RSAs with Performance-Based Conditions Grant Date Fair Value 0% 25% 100% 200% February 16, 2021 $ 2,197 $ - $ 549 $ 2,197 $ 4,394 February 15, 2022 $ 3,097 $ - $ 774 $ 3,097 $ 6,194 February 21, 2023 $ 4,192 $ - $ 1,048 $ 4,192 $ 8,384

Business Combinations (Tables)

Business Combinations (Tables)	3 Months Ended
Business Combinations (Tables)	Mar. 31, 2023
2022 Acquisitions
Business Combinations
Summary of businesses acquired	2022 Acquisitions Date Cash Paid Goodwill Acquired Billings 2/3/2022 $ 7,005 $ 3,313 All others Various 1,500 780 Total $ 8,505 $ 4,093

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	3 Months Ended
Accrued Liabilities (Tables)	Mar. 31, 2023
Accrued Liabilities.
Schedule of components of accrued liabilities	The following table sets forth the components of accrued liabilities, in thousands: As of March 31, 2023 December 31, 2022 Accrued liabilities: Salaries, wages, and bonus/commissions $ 52,742 $ 75,901 Income taxes payable 40,740 2,134 Insurance liabilities 28,199 28,870 Customer rebates 11,169 21,561 Deferred revenue 20,738 21,940 Sales and property taxes 15,850 15,757 Interest payable on long-term debt 3,193 12,146 Other 20,716 21,061 Total accrued liabilities $ 193,347 $ 199,370

Other Commitments and Conting_2

Other Commitments and Contingencies (Tables)	3 Months Ended
Other Commitments and Contingencies (Tables)	Mar. 31, 2023
Other Commitments and Contingencies
Summary of outstanding bonds	The following table summarizes our outstanding performance, licensing, insurance and other bonds, in thousands: As of March 31, 2023 December 31, 2022 Outstanding bonds: Performance bonds $ 147,468 $ 152,434 Licensing, insurance, and other bonds 25,527 25,439 Total bonds $ 172,995 $ 177,873

Basis of Presentation (Details)

Basis of Presentation (Details)	3 Months Ended
Basis of Presentation (Details)	Mar. 31, 2023 segment
Summary of Significant Accounting Policies
Number of reportable segments	2

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue Recognition
Net sales	$ 1,265,238	$ 1,168,918
Insulation and accessories
Revenue Recognition
Net sales	1,051,596	972,291
Glass and windows
Revenue Recognition
Net sales	63,442	51,196
Gutters
Revenue Recognition
Net sales	60,955	62,586
All other
Revenue Recognition
Net sales	89,245	82,845
Residential
Revenue Recognition
Net sales	818,639	756,293
Commercial and Industrial
Revenue Recognition
Net sales	446,599	412,625
Operating Segment \| Installation
Revenue Recognition
Net sales	767,090	676,693
Operating Segment \| Installation \| Insulation and accessories
Revenue Recognition
Net sales	600,767	536,341
Operating Segment \| Installation \| Glass and windows
Revenue Recognition
Net sales	63,442	51,196
Operating Segment \| Installation \| Gutters
Revenue Recognition
Net sales	28,278	22,957
Operating Segment \| Installation \| All other
Revenue Recognition
Net sales	74,603	66,199
Operating Segment \| Installation \| Residential
Revenue Recognition
Net sales	645,703	563,303
Operating Segment \| Installation \| Commercial and Industrial
Revenue Recognition
Net sales	121,387	113,390
Operating Segment \| Specialty Distribution
Revenue Recognition
Net sales	558,375	543,862
Operating Segment \| Specialty Distribution \| Insulation and accessories
Revenue Recognition
Net sales	502,802	479,760
Operating Segment \| Specialty Distribution \| Gutters
Revenue Recognition
Net sales	39,842	46,631
Operating Segment \| Specialty Distribution \| All other
Revenue Recognition
Net sales	15,731	17,471
Operating Segment \| Specialty Distribution \| Residential
Revenue Recognition
Net sales	224,326	236,411
Operating Segment \| Specialty Distribution \| Commercial and Industrial
Revenue Recognition
Net sales	334,049	307,451
Eliminations
Revenue Recognition
Net sales	(60,227)	(51,637)
Eliminations \| Insulation and accessories
Revenue Recognition
Net sales	(51,973)	(43,810)
Eliminations \| Gutters
Revenue Recognition
Net sales	(7,165)	(7,002)
Eliminations \| All other
Revenue Recognition
Net sales	(1,089)	(825)
Eliminations \| Residential
Revenue Recognition
Net sales	(51,390)	(43,421)
Eliminations \| Commercial and Industrial
Revenue Recognition
Net sales	$ (8,837)	$ (8,216)

Revenue Recognition - Other (De

Revenue Recognition - Other (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Contract Liabilities
Deferred revenue	$ 20,738	$ 21,940
Uncompleted Performance Obligations
Amount remaining on uncompleted performance obligations	$ 395,500
Expected timing of satisfaction of performance obligations	over the next 18 months
Receivables, net
Contract Assets
Receivables, unbilled	$ 78,034	75,481
Uncompleted Performance Obligations
Retained receivables	66,700	63,000
Accrued liabilities
Contract Liabilities
Deferred revenue	$ 20,738	$ 21,940

Goodwill and Other Intangible_2

Goodwill and Other Intangibles - Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) item	Dec. 31, 2022 USD ($)	Jan. 26, 2023 USD ($)
Changes in the carrying amount of goodwill
Number of reporting units \| item	2
Impairment of goodwill		$ 0
Gross Goodwill, at beginning of period	$ 2,729,015
Additions	25,384
Fx Translation Adjustment	16
Gross Goodwill, at end of period	2,754,415	2,729,015
Accumulated Impairment Losses	(762,021)
Net Goodwill	1,992,394	1,966,994	$ 25,400
Installation
Changes in the carrying amount of goodwill
Gross Goodwill, at beginning of period	1,826,979
Additions	25,384
Gross Goodwill, at end of period	1,852,363	1,826,979
Accumulated Impairment Losses	(762,021)
Net Goodwill	1,090,342
Specialty Distribution
Changes in the carrying amount of goodwill
Gross Goodwill, at beginning of period	902,036
Fx Translation Adjustment	16
Gross Goodwill, at end of period	902,052	$ 902,036
Net Goodwill	$ 902,052

Goodwill and Other Intangible_3

Goodwill and Other Intangibles - Other intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Other intangible assets
Gross Definite-lived intangible assets	$ 791,939		$ 782,316
Accumulated Amortization	(184,256)		(167,349)
Net definite-lived intangible assets	607,683		$ 614,967
Amortization expense	$ 16,896	$ 17,825

Long-Term Debt - Reconciliation

Long-Term Debt - Reconciliation (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Long-Term Debt
Long-term debt	$ 1,464,935
Unamortized debt issuance costs	(16,633)	$ (17,352)
Total debt, net of unamortized debt issuance costs	1,448,302	1,457,325
Less: current portion of long-term debt	42,371	40,068
Total long-term debt	$ 1,405,931	1,417,257
3.625% Senior Notes
Long-Term Debt
Interest rate (as a percent)	3.625%
Long-term debt	$ 400,000	400,000
4.125% Senior Notes
Long-Term Debt
Interest rate (as a percent)	4.125%
Long-term debt	$ 500,000	500,000
Term Loan Facility
Long-Term Debt
Long-term debt	558,750	566,250
Equipment Notes
Long-Term Debt
Long-term debt	$ 6,185	$ 8,427

Long-Term Debt - Schedule of de

Long-Term Debt - Schedule of debt maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Schedule of Debt Maturity by Years:
2023	$ 30,326
2024	47,109
2025	48,750
2026	438,750
Thereafter	900,000
Total	1,464,935
3.625% Senior Notes
Schedule of Debt Maturity by Years:
Thereafter	400,000
Total	400,000	$ 400,000
4.125% Senior Notes
Schedule of Debt Maturity by Years:
Thereafter	500,000
Total	500,000	500,000
Term Loan Facility
Schedule of Debt Maturity by Years:
2023	26,250
2024	45,000
2025	48,750
2026	438,750
Total	558,750	566,250
Equipment Notes
Schedule of Debt Maturity by Years:
2023	4,076
2024	2,109
Total	$ 6,185	$ 8,427

Long-Term Debt - Key Terms of C

Long-Term Debt - Key Terms of Credit Agreement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Revolving Facility
Long-Term Debt
Availability	$ 500,000	$ 500,000
Revolving Facility \| Minimum
Long-Term Debt
Commitment fee (as a percent)	0.15%
Revolving Facility \| Maximum
Long-Term Debt
Commitment fee (as a percent)	0.275%
Credit Agreement
Long-Term Debt
Additional delayed draw term loan	$ 300,000
Additional term loan and/or revolver capacity available under incremental facility	$ 300,000
Scheduled maturity date	Oct. 07, 2026
Credit Agreement \| Base Rate Borrowings \| Minimum
Long-Term Debt
Applicable margin based on total leverage ratio	0%
Credit Agreement \| Base Rate Borrowings \| Maximum
Long-Term Debt
Applicable margin based on total leverage ratio	1.50%
Credit Agreement \| Base Rate Borrowings \| Federal Funds Rate
Long-Term Debt
Basis spread	0.50%
Credit Agreement \| Base Rate Borrowings \| SOFR
Long-Term Debt
Basis spread	1%
Maturity of the reference rate	1 month
Credit Agreement \| SOFR Rate Borrowings
Long-Term Debt
Interest rate floor (as a percent)	0%
Credit Agreement \| SOFR Rate Borrowings \| Minimum
Long-Term Debt
Applicable margin based on total leverage ratio	1%
Credit Agreement \| SOFR Rate Borrowings \| Maximum
Long-Term Debt
Applicable margin based on total leverage ratio	2.50%
Credit Agreement \| Revolving Facility
Long-Term Debt
Availability	$ 500,000
Sublimit for issuance of letters of credit under Revolving Facility*	100,000
Sublimit for swingline loans under Revolving Facility*	$ 35,000
Interest rate	5.91%
Credit Agreement \| Term Loan Facility
Long-Term Debt
Availability	$ 300,000

Long-Term Debt - Revolving Faci

Long-Term Debt - Revolving Facility (Details) - Revolving Facility - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Long-Term Debt
Revolving Facility	$ 500,000	$ 500,000
Less: standby letters of credit	(67,689)	(67,689)
Availability under revolving facility	$ 432,311	$ 432,311
Minimum
Long-Term Debt
Commitment fee (as a percent)	0.15%
Maximum
Long-Term Debt
Commitment fee (as a percent)	0.275%

Long-Term Debt - Senior Notes a

Long-Term Debt - Senior Notes and Equipment Notes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Long-Term Debt
Amount outstanding	$ 1,448,302	$ 1,457,325
Debt Instrument Redemption Option Two \| Prior to March 15, 2024
Long-Term Debt
Redemption price as a percentage of principal	103.625%
Debt instrument, conditional redemption, threshold percentage of aggregate principal amount originally issued remains outstanding	60%
Equipment Notes
Long-Term Debt
Principal amount of debt	$ 41,600
Debt term	5 years
Equipment Notes \| Minimum
Long-Term Debt
Interest rate (as a percent)	2.80%
Equipment Notes \| Maximum
Long-Term Debt
Interest rate (as a percent)	4.40%
3.625% Senior Notes
Long-Term Debt
Interest rate (as a percent)	3.625%
Principal amount of debt	$ 400,000
3.625% Senior Notes \| Change in Control Scenario
Long-Term Debt
Redemption price as a percentage of principal	101%
3.625% Senior Notes \| Debt Instrument Redemption Option One \| Prior to March 15, 2024
Long-Term Debt
Redemption price as a percentage of principal	100%
3.625% Senior Notes \| Debt Instrument Redemption Option Two \| Maximum \| Prior to March 15, 2024
Long-Term Debt
Redemption price, percentage of principal amount redeemed	40%
4.125% Senior Notes
Long-Term Debt
Interest rate (as a percent)	4.125%
Principal amount of debt	$ 500,000
4.125% Senior Notes \| On or after October 15, 2026
Long-Term Debt
Redemption price as a percentage of principal	102.063%
4.125% Senior Notes \| On or after October 15, 2027
Long-Term Debt
Redemption price as a percentage of principal	101.375%
4.125% Senior Notes \| On or after October 15, 2028
Long-Term Debt
Redemption price as a percentage of principal	100.688%
4.125% Senior Notes \| On October 15, 2029 and thereafter
Long-Term Debt
Redemption price as a percentage of principal	100%
4.125% Senior Notes \| Prior to October 15, 2026
Long-Term Debt
Basis spread on treasury rate	0.50%
4.125% Senior Notes \| Prior to October 15, 2024
Long-Term Debt
Redemption price as a percentage of principal	104.125%
Redemption price, percentage of principal amount redeemed	40%
Debt instrument, conditional redemption, threshold percentage of aggregate principal amount originally issued remains outstanding	60%
4.125% Senior Notes \| Change in Control Scenario
Long-Term Debt
Redemption price as a percentage of principal	101%

Long-Term Debt - Other (Details

Long-Term Debt - Other (Details)	3 Months Ended
Long-Term Debt - Other (Details)	Mar. 31, 2023
Debt covenants
Maximum Net Leverage Ratio	3.50
Minimum Interest Coverage Ratio	3
Senior Notes \| Event of Default Scenario
Debt covenants
Minimum percentage of principal of debt holders to declare debt immediately due and payable	30%
3.625% Senior Notes
Debt covenants
Interest rate (as a percent)	3.625%
4.125% Senior Notes
Debt covenants
Interest rate (as a percent)	4.125%

Fair Value Measurements (Detail

Fair Value Measurements (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Fair Value on Non-Recurring Basis
Amount outstanding	$ 1,464,935
3.625% Senior Notes
Fair Value on Non-Recurring Basis
Interest rate (as a percent)	3.625%
Amount outstanding	$ 400,000
3.625% Senior Notes \| Fair Value on Non-Recurring Basis \| Level 1 fair value measurement
Fair Value on Non-Recurring Basis
Interest rate (as a percent)	3.625%
Fair value	$ 348,580
4.125% Senior Notes
Fair Value on Non-Recurring Basis
Interest rate (as a percent)	4.125%
Amount outstanding	$ 500,000
4.125% Senior Notes \| Fair Value on Non-Recurring Basis \| Level 1 fair value measurement
Fair Value on Non-Recurring Basis
Interest rate (as a percent)	4.125%
Fair value	$ 427,500

Segment Information (Details)

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
Segment Information (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Segment information
Net sales	$ 1,265,238	$ 1,168,918
Operating profit as, reported	199,431	163,954
Other expense, net	(16,116)	(11,282)
Income before income taxes	183,315	152,672
Total Assets	4,700,914		$ 4,606,831
Operating Segment
Segment information
Operating profit as, reported	210,259	174,391
Operating Segment \| Installation
Segment information
Net sales	767,090	676,693
Operating profit as, reported	146,897	112,679
Operating Segment \| Specialty Distribution
Segment information
Net sales	558,375	543,862
Operating profit as, reported	73,333	70,420
Eliminations
Segment information
Net sales	(60,227)	(51,637)
Intercompany Eliminations
Segment information
Net sales	(60,227)	(51,637)
Operating profit as, reported	(9,971)	(8,708)
Corporate
Segment information
General corporate expense, net	$ (10,828)	$ (10,437)

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Income Taxes
Effective tax rate (as a percent)	25.90%	24.90%
Benefit related to share-based compensation	$ (45)	$ 1,605

Net Income Per Share - Calculat

Net Income Per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net income - basic and diluted	$ 135,870	$ 114,711
Weighted average number of common shares outstanding - basic	31,550,658	32,738,525
Dilutive effect of common stock equivalents:
Stock options	86,046	124,655
Weighted average number of common shares outstanding - diluted	31,713,239	33,042,490
Basic net income per common share	$ 4.31	$ 3.50
Diluted net income per common share	$ 4.28	$ 3.47
Service-based conditions
Dilutive effect of common stock equivalents:
Restricted stock awards	22,643	15,127
Market-based conditions
Dilutive effect of common stock equivalents:
Restricted stock awards	24,861	100,158
Performance-based conditions
Dilutive effect of common stock equivalents:
Restricted stock awards	29,031	64,025

Net Income Per Share - Anti-dil

Net Income Per Share - Anti-dilutive common stock equivalents (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Anti-dilutive common stock equivalents
Total anti-dilutive common stock equivalents	42,376	35,121
Restricted Stock Awards \| Service-based conditions
Anti-dilutive common stock equivalents
Total anti-dilutive common stock equivalents	11,163	10,244
Restricted Stock Awards \| Market-based conditions
Anti-dilutive common stock equivalents
Total anti-dilutive common stock equivalents	8,933	382
Restricted Stock Awards \| Performance-based conditions
Anti-dilutive common stock equivalents
Total anti-dilutive common stock equivalents		7,908
Stock Options
Anti-dilutive common stock equivalents
Total anti-dilutive common stock equivalents	22,280	16,587

Share-Based Compensation - Expe

Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-Based Compensation
Share-based compensation expense	$ 3,135	$ 3,727
Income tax (expense) benefit	$ (45)	$ 1,605
2015 Plan \| Maximum
Share-Based Compensation
Number of shares authorized	4

Share-Based Compensation - Acti

Share-Based Compensation - Activity (Details) - USD ($)				3 Months Ended
Share-Based Compensation - Activity (Details) - USD ($)	Feb. 21, 2023	Feb. 15, 2022	Feb. 16, 2021	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Stock Options, Number of Shares
Converted/Exercised (in shares)				(28,840)	(12,269)
Stock options, additional disclosures
Weighted average remaining contractual term for vested stock options				5 years 10 months 24 days
Unrecognized share-based compensation expense
Total unrecognized compensation expense related to unvested awards				$ 25,232,000
Restricted Stock Awards
Restricted Stock Awards, Number of Shares
Balance at beginning of period (in shares)				173,200
Granted (in shares)				95,400
Converted/Exercised (in shares)				(95,000)
Forfeited/Expired (in shares)				(5,300)
Balance at end of period (in shares)				168,300
Restricted Stock Awards, Weighted Average Grant Date Fair Value Per Share
Balance at beginning of period (in dollars per share)				$ 195.06
Granted (in dollars per share)				202.24
Converted/Exercised (in dollars per share)				145.57
Forfeited/Expired (in dollars per share)				242.76
Balance at end of period (in dollars per share)				$ 225.41
Unrecognized share-based compensation expense
RSAs, Unrecognized Compensation Expense on Unvested Awards				$ 24,835,000
Weighted Average Remaining Compensation Expense Period				1 year 2 months 12 days
Assumptions used to estimate the fair values of the awards granted:
Measurement period (years)				2 years 10 months 9 days	2 years 10 months 13 days
Risk free interest rate (as a percent)				4.42%	1.76%
Dividend yield (as a percent)				0%	0%
Estimated fair value of market-based RSAs at grant date (in dollars per share)				$ 270.64	$ 298.20
Restricted Stock Awards \| Performance-based conditions
Restricted stock awards, additional disclosures
Grant date fair value	$ 4,192,000	$ 3,097,000	$ 2,197,000
Restricted Stock Awards \| Performance-based conditions \| Payout Range-0%
Restricted stock awards, additional disclosures
Payout range (as a percent)	0%	0%	0%
Restricted Stock Awards \| Performance-based conditions \| Payout Range-25%
Restricted stock awards, additional disclosures
Payout range (as a percent)	25%	25%	25%
Related expenses	$ 1,048,000	$ 774,000	$ 549,000
Restricted Stock Awards \| Performance-based conditions \| Payout Range-100%
Restricted stock awards, additional disclosures
Payout range (as a percent)	100%	100%	100%
Related expenses	$ 4,192,000	$ 3,097,000	$ 2,197,000
Restricted Stock Awards \| Performance-based conditions \| Payout Range-200%
Restricted stock awards, additional disclosures
Payout range (as a percent)	200%	200%	200%
Related expenses	$ 8,384,000	$ 6,194,000	$ 4,394,000
RSAs granted February 17, 2020 \| Performance-based conditions
Restricted stock awards, additional disclosures
Cumulative period of achievement				3 years
Cumulative achievement percentage				200%
Total compensation expense recognized over the performance period, net of forfeitures				$ 5,000,000
Stock Options
Stock Options, Number of Shares
Balance at beginning of period (in shares)				182,200
Converted/Exercised (in shares)				(28,800)
Balance at end of period (in shares)				153,400
Stock Options, Weighted Average Grant Date Fair Value Per Share
Balance at beginning of period (in dollars per share)				$ 32.25
Converted/Exercised (in dollars per share)				13.07
Balance at end of period (in dollars per share)				35.98
Stock Options, Weighted Average Exercise Price Per Share
Balance at beginning of period (in dollars per share)				86.79
Converted/Exercised (in dollars per share)				35.67
Balance at end of period (in dollars per share)				$ 96.40
Stock options, additional disclosures
Aggregate intrinsic value				$ 17,277,200		$ 13,992,300
Converted/Exercised aggregate intrinsic value				$ 4,504,800
Exercisable, Number of shares				145,900
Exercisable, Weighted Average Grant Date Fair Value Per Share				$ 33.25
Exercisable Weighted Average Exercise Price Per Share				$ 90.39
Exercisable, Aggregate Intrinsic Value				$ 17,277,200
Unrecognized share-based compensation expense
Stock options, Unrecognized Compensation Expense on Unvested Awards				$ 397,000
Weighted Average Remaining Compensation Expense Period				6 months

Business Combinations - Summary

Business Combinations - Summary (Details) - USD ($) $ in Thousands			3 Months Ended
	Jan. 26, 2023	Feb. 23, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Business Combinations
Acquisition related costs			$ 1,700	$ 900
Goodwill	$ 25,400		1,992,394		$ 1,966,994
Summary of businesses acquired:
Goodwill	25,400		1,992,394		1,966,994
Goodwill expected to be deducted for income tax purposes			25,400	4,100
Estimated fair values
Goodwill	25,400		$ 1,992,394		$ 1,966,994
SRI Holdings
Business Combinations
Purchase price	$ 45,800
2022 Acquisitions
Summary of businesses acquired:
Cash Paid				8,505
Goodwill Acquired				4,093
Billings
Summary of businesses acquired:
Cash Paid		$ 7,005
Goodwill Acquired		$ 3,313
All others
Summary of businesses acquired:
Cash Paid				1,500
Goodwill Acquired				$ 780

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accrued Liabilities.
Salaries, wages, and bonus/commissions	$ 52,742	$ 75,901
Income taxes payable	40,740	2,134
Insurance liabilities	28,199	28,870
Customer rebates	11,169	21,561
Deferred revenue	20,738	21,940
Sales and property taxes	15,850	15,757
Interest payable on long-term debt	3,193	12,146
Other	20,716	21,061
Total accrued liabilities	$ 193,347	$ 199,370

Other Commitments and Conting_3

Other Commitments and Contingencies (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Outstanding Bonds
Performance bonds	$ 147,468	$ 152,434
Licensing, insurance, and other bonds	25,527	25,439
Total bonds	$ 172,995	$ 177,873